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&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;u&gt;Subsidiary Formation &amp;#150; Cooling Technology
Solutions, Inc., March 4, 2013&lt;/u&gt;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;On March 4, 2013, the Board of Directors of
Epazz, Inc. (the &amp;#147;Company&amp;#148;), consisting solely of Shaun Passley, the Company&amp;#146;s majority shareholder, approved
the formation of a new wholly-owned subsidiary of the Company named Cooling Technology Solutions, Inc. The Company plans to file
a non-provisional patent application for its Project Flex product in the name of Cooling Technology Solutions, Inc., however, as
of the date of this filing there has been no activity and, as such, there are no revenues or expenses.&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>Subsidiary Formation</ElementDefenition><ElementReferences>No definition available.</ElementReferences><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>3. Subsidiary Formation</Label></Row></Rows><Footnotes /><IsEquityReport>false</IsEquityReport><ReportName>3. Subsidiary Formation</ReportName><MonetaryRoundingLevel>UnKnown</MonetaryRoundingLevel><SharesRoundingLevel>UnKnown</SharesRoundingLevel><PerShareRoundingLevel>UnKnown</PerShareRoundingLevel><ExchangeRateRoundingLevel>UnKnown</ExchangeRateRoundingLevel><HasCustomUnits>true</HasCustomUnits><IsEmbedReport>false</IsEmbedReport><IsMultiCurrency>false</IsMultiCurrency><ReportType>Sheet</ReportType><RoleURI>http://epazz.com/role/SubsidiaryFormation</RoleURI><NumberOfCols>1</NumberOfCols><NumberOfRows>2</NumberOfRows></InstanceReport>
